axr8k1209_exh102.htm


    
      Exhibit
10.2

    

    PROMISSORY
NOTE

     

    


     

    
      
        	
                BORROWER:

              	
                AMREP
      Southwest Inc.

              	
                BANK:

              	
                Compass
      Bank

              
	 
      	
                333
      Rio Rancho Drive NE

              	 
      	
                Real
      Estate Banking

              
	 
      	
                Rio
      Rancho, New Mexico 87124-1450

              	 
      	
                505
      Marquette NW

              
	 
      	 
      	 
      	
                Albuquerque,
      NM  87102

              
	 
      	 
      	 
      	 
      
	
                Principal
      Amount:

              	
                $22,500,000.00

              	 
      	
                Date:
      December 17, 2009

              


      

    

    


     

    PROMISE TO
PAY.  AMREP
Southwest Inc. ("Borrower") promises to pay to Compass Bank ("Bank"), or order, in
lawful money of the United States of America, the principal amount of
$22,500,000.00) or so much as may be outstanding, together with interest on the
unpaid outstanding principal balance. Interest shall be calculated from the date
hereof until repayment.

     

     

    NON-REVOLVING
CREDIT.  This Note is non-revolving.  No re-advance
of any principal will be made.

     

     

    PAYMENTS.

     

    PRINCIPAL PAYMENTS. The
principal balance of the Note shall be repaid as follows:

     

    
      	
               
      

            	
              1.

            	
              Principal
      payments equal to 65% of net cash from land sales in excess of $5,400,676
      received by Borrower during the fiscal year ending April 30, 2010, payable
      within five (5) business days of receipt of cash from such sale(s),
      and

            


    

     

    
      	
               
      

            	
              2.

            	
              Principal
      payments equal to 65% net cash from land sales in excess of
      $15,263,730 received by Borrower during the fiscal year ending April 30,
      2011, payable within five (5) business days of receipt of cash from such
      sale(s), and

            


    

     

    
      	
               
      

            	
              3.

            	
              The
      entire Note balance shall be due and payable in full on December 16,
      2010.

            


    

     

     

    INTEREST
PAYMENTS.  Borrower will pay regular monthly payments of all
accrued interest monthly, beginning January 17, 2010, with all subsequent
interest payments to be due on the same day of each following
month.

     

    Unless
otherwise agreed or required by applicable law, all payments (except the excess
cash principal payments from land sales under (1) and (2) above) will be applied
first to interest, then to principal due, then to any unpaid collection costs
and other charges due under this Note, with any remaining amount to the
outstanding principal balance. The annual interest rate for this Note is
computed on a 365/360 basis; that is, by applying the ratio of the annual
interest rate over a year of 360 days, multiplied by the outstanding principal
balance, multiplied by the actual number of days the principal balance is
outstanding. Borrower will pay Bank at Bank's address shown above or at such
other place as Bank may designate in writing.

     

    


    INTEREST RATE; MINIMUM
RATE.  The interest rate on this Note is a rate based on
the  "LIBOR" index, the London Interbank Offered Rate for the
applicable Reference Period stated on Reuter's Monitor Money Rates Service two
(2) days before the beginning of each Interest Period (or in the event no such
rate is stated on that date, the rate stated on the day most immediately
preceding the date of determination on which a rate was stated), as adjusted
from time to time in Bank's sole discretion for then-applicable reserve
requirements, deposit insurance assessment rates and other regulatory costs. If
Reuter's becomes unavailable Bank may use another source to determine LIBOR. If
Reuter's states more than one rate for the applicable Reference Period, the
applicable rate shall be the arithmetic mean of all stated rates for that
Reference Period.  The LIBOR Index is not necessarily the lowest rate
charged by Bank on its loans.

     

    The
LIBOR based interest rate change will not occur more than often than at the end
of each Reference Period. The interest rate to be applied to the unpaid
principal balance of this Note will be a rate of 3.50 percentage
points over the
applicable Reference Period Index, adjusted if necessary for any maximum rate
limitations described below.  Provided, however, that the interest
rate will not at any time be less than the minimum rate of 5.00% per
annum.

     

    The
"Reference Period" for each LIBOR Rate period elected by Borrower, shall be 30
days. This Reference Period is for reference purposes only, and the actual
Interest Periods under this Note may be for periods of more than one or less
than the referenced period, depending on whether or not the last day of the
Interest

    
       

      
         


      

      
         


      

    


     

    Period
falls on a Business Day. "Business Day" means each day other than a Saturday, a
Sunday, or any holiday on which Bank is closed for business.  The
Index on any date may be different for each Reference Period.

    
 Each
"Interest Period" shall be a period equal to the duration of the Reference
Period; provided, however, if the last day of an Interest Period would not fall
on a Business Day, then the Interest Period will end on the next following
Business Day. The initial Interest Period shall commence on the date of the
Note, and each succeeding Interest Period shall commence on the day immediately
following the expiration of the preceding Interest Period.

    


     

    NO PREPAYMENT
PENALTY.  Borrower may pay without penalty all or a portion of
the amount owed earlier than it is due. Early payments will not, unless agreed
to by Bank in writing, relieve Borrower of Borrower's obligation to continue to
make payments of accrued unpaid interest. Rather, early payments will reduce the
principal balance due. Borrower agrees not to send Bank payments marked "paid in
full", "without recourse", or similar language. If Borrower sends such a
payment, Bank may accept it without losing any of Bank's rights under this Note,
and Borrower will remain obligated to pay any further amount owed to
Bank.

     

    


    LOAN
AGREEMENT.  This Note is made pursuant to and is subject to the
terms and conditions of the Loan Agreement between Borrower and Bank dated as of
December 17, 2009, as amended or replaced from time to time (the
"Agreement").

    


     

    DEFAULT.  Any event
of default under the Agreement shall constitute a default under this
Note.

     

     

    BANK'S RIGHTS. Upon default,
Bank may declare the entire unpaid principal balance on this Note and all
accrued unpaid interest immediately due, and then Borrower will pay that
amount.  Bank also may exercise any and all remedies available to it
in the Note, the Agreement, at law or in equity.  Bank's rights are
cumulative and may be exercised together, separately, in any order, and include
the right to recover costs and attorneys fees.

     

     

    GOVERNING LAW.  This
Note will be governed by, construed and enforced in accordance with federal law
and the laws of the State of New Mexico. This Note has been accepted by Bank in
the State of New Mexico.

     

    


    AMENDMENTS.  This
Note and the Agreement constitute the entire understanding and agreement of the
parties as to the matters set forth in this Note. No alteration or amendment of
this Note shall be effective unless given in writing and signed by the party or
parties sought to be bound by the alteration or amendment.

    
 

    SEVERABILITY. If a court of
competent jurisdiction finds any provision of this Note to be illegal, invalid,
or unenforceable as to any circumstance, that finding shall not make the
offending provision illegal, invalid, or unenforceable as to any other
circumstance. If feasible, the offending provision shall be considered modified
so that it becomes legal, valid and enforceable. If the offending provision
cannot be so modified, it shall be considered deleted from this Note. Unless
otherwise required by law, the illegality, invalidity, or unenforceability of
any provision of this Note shall not affect the legality, validity or
enforceability of any other provision of this Note.

     

    


    NO
ASSIGNMENT.  Borrower agrees not to assign any of Borrower's
rights or obligations under this Note.

     

    


    JURISDICTION and
VENUE.  Any legal action or proceeding brought by Bank or
Borrower against the other arising out of or relating to the loan evidenced by
this Note (a "Proceeding") shall be instituted in the federal court for or the
state court sitting in Bernalillo County, New Mexico. With respect to any
Proceeding, each Borrower, to the fullest extent permitted by law: (i) waives
any objections that Borrower may now or hereafter have based on venue and/or
forum non-convenience of any Proceeding in such court; and (ii) irrevocably
submits to the jurisdiction of any such court in any Proceeding. Notwithstanding
anything to the contrary herein, Bank may commence legal proceedings or
otherwise proceed against Borrower in any other jurisdiction if determined by
Bank to be necessary in order to fully enforce or exercise any right or remedy
of Bank relating to this loan.

     

    


    SUCCESSOR INTERESTS. The terms
of this Note shall be binding upon Borrower, and upon Borrower's heirs, personal
representatives, successors and assigns, and shall inure to the benefit of Bank
and its successors and assigns.


    
      
         


      

      
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    PRIOR
TO SIGNING THIS NOTE. BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS
NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO THE
TERMS OF THE NOTE.  BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY
OF THIS PROMISSORY NOTE.

     

    


     

    BORROWER:

     

    AMREP Southwest,
Inc.

     

    


     

    By:   /s/ James
H.
Wall             

          James
H. Wall, President

     

    


     

    


     

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